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South Africa, pharmaceutical industry face off on patent reform
South Africa’s efforts to reform its intellectual property (IP) regime in order to improve access to medicines has sparked a firestorm in recent weeks, with major pharmaceutical companies openly at odds with civil society and developing countries.
The draft IP policy was published last September, with Pretoria now taking steps toward its eventual implementation. The changes would establish a system of substantive patent examination, and would also strengthen the existing criteria for “patentability.” These revisions, proponents say, would make it easier for generic drugs to compete in a market that has long been dominated by the research-based pharmaceutical industry.
“The current system allows pharmaceutical companies to obtain multiple patents on the same drug, even for inventions that do not fall under the country’s definition of innovation,” various civil society organisations have said in advocating for the reform.
The existing regime, they added, thus allows these companies to extend their monopolies and charge inflated prices for medicines, while making it difficult for generic manufacturers to compete.
However, the leak soon thereafter of a memo aimed at helping major drug companies undermine the proposed change has escalated the row, with South African Health Minister Aaron Motsoaledi openly comparing the industry campaign to “genocide.”
Civil society, developing countries weigh in
Several developing countries, along with a coalition of civil society groups, have spoken up in support of South Africa, most recently during last week’s meeting of the World Health Organization’s (WHO) Executive Board.
The industry response is “unacceptable in a country facing one of the world’s most acute HIV and [tuberculosis] epidemics,” Médecins Sans Frontières said at the meeting, noting that medicine prices in South Africa are up to 35 times higher than in countries where generics have a greater market share.
Some civil society organisations have formally called on the WHO Executive Board to adopt a resolution expressing solidarity with the African country.
WHO Director-General Margaret Chan has similarly expressed her concern, saying that “no government should be intimidated by interested parties for doing the right thing in public health.”
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It’s not just money that is needed – Using a bundled approach to increase productivity in the AU’s Year of Agriculture
The majority of people in Africa are engaged in the same profession: farming. Most of these individuals are small-holder farmers with fewer than 5 acres of land and little access to seed, fertilizer, financing, training or markets. Increasing the yields of these small holders has the potential to lift millions out of poverty in the coming decades.
More than any other sector, agriculture has the potential to spur inclusive economic growth in Africa. Growth in agriculture in the developing world has a multiplier effect on expenditures in poor households. Research shows that a 1 percent increase in GDP driven by agriculture leads to a massive 6 percent increase in expenditure growth for the poorest 10 percent. The Chinese growth story corroborates this research. China’s poverty reduction miracle was disproportionately achieved through growth in rural areas, with agriculture having a greater impact than any other sector.
African governments have already begun to prioritize agricultural growth. 2014 is the African Union’s (AU) Year of Agriculture, but agriculture is not a new area of focus for AU countries. Just over 10 years ago, in the 2003 Maputo Declaration, AU countries pledged to devote 10 percent of national expenditure to agriculture. A handful of countries have consistently exceeded this target, but most have fallen short. This year offers an opportunity to recommit to the 10 percent target and to draw attention to the importance of building an enabling environment for increased farm productivity.
Lack of finance is one of the largest barriers to increasing small-holder farmer productivity in sub-Saharan Africa, but many other factors compound the problem, such as weak property rights, lack of market access, insufficient technical knowledge, poor storage capacity, constrained water and energy supplies, and limited infrastructure. “Without access to credit, most small holders are confined to sub-optimal inputs and methods, and therefore to low productivity,” states the Dalberg report Catalyzing Smallholder Agriculture Finance. In farming, maximizing yields at harvest time requires investments in inputs during planting such as hybrid seeds and fertilizer. But most farmers do not have enough cash on hand before planting to purchase these high-quality inputs. Without access to finance, farmers cannot increase their yields and their incomes. In addition to credit, farmers need support throughout the value chain to improve productivity. For example, farmers using new inputs require training to utilize them effectively and good infrastructure to bring the final product to market.
Given the demand for agricultural finance, it seems like banks should be jumping at the opportunity to offer credit to farmers. The Dalberg report estimates the global market demand for small-holder credit at $450 billion and the total supply at $9 billion – just 2 percent of the need. If the market opportunity is so great, what’s holding banks back? In short, risk and fear of lower profit margins. Banks evaluate agriculture as a high-risk sector and are concerned about default caused by weather- or pest-related crop failure. Banks are also concerned about the high cost of operating in rural areas. Most banks and microfinance institutions work in urban and peri-urban areas, and would have to invest in a costly expansion of operations to serve rural customers.
Some microfinance institutions have designed innovative products that mitigate risk and lower the cost of delivering financial services to rural areas. These farm microfinance products provide support to the farmer along the entire agricultural value chain to surmount the barriers to agricultural productivity. BASIX, a microfinance institution in India, offers agriculture extension and training services in combination with credit. The business reached 500,000 clients by 2010 and was modestly profitable. Opportunity International offers farm microfinance to clients in several countries in sub-Saharan Africa, including Kenya, Malawi and Uganda. Their lending model also links their clients to input suppliers, extension providers and crop buyers. Our organization, One Acre Fund, pairs finance with the distribution of seed and fertilizer, agriculture trainings and market facilitation. All three institutions have developed farm microfinance products that “bundle” additional services that reduce the barriers to agricultural productivity that small-holder farmers face.
As we move further into the AU’s Year of Agriculture, what can be done by African governments, donor countries, nongovernmental organizations and the private sector to further increase access to farm microfinance and further reduce the barriers to agricultural productivity?
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Donors and African governments should work together to establish a multi-donor trust fund that provides seed funding for commercial banks and microfinance organizations to develop farm microfinance products. The Initiative for Smallholder Finance offers excellent guidance on the importance of donor funding that addresses supply-side constraints in an October 2013 briefing paper.
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African Union countries should use the occasion of the Year of Agriculture to recommit themselves to allocating 10 percent of expenditure to agriculture, as set out in the 2003 Maputo Declaration. AU countries should recognize the importance of creating an enabling policy and infrastructure environment for farmers to improve yields and bring their products to market. The AU should not ignore the agricultural finance sector, and should pledge to make its development a budgetary priority.
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Commercial banks and microfinance organizations should use innovative design to develop new products that meet the vast demand from small-holder farmers. They should partner with other institutions that are versed in the challenges farmers face to offer services such as farm input delivery, technical training and market facilitation that will help their clients maximize their profit potential.
Combining increased access to farm microfinance with a value chain approach to farmer support has the potential to spur economic growth and reduce poverty in Africa. During the Year of Agriculture, AU countries, donor governments, nongovernmental organizations and the private sector all have the opportunity to take a bundled approach to make Africa’s agriculture potential a reality.
Stephanie Hanson is director of policy and outreach, and Laurence Dare is the East Africa policy manager at One Acre Fund, an agriculture social enterprise that serves over 130,000 small-holder farmers in Kenya, Rwanda, Burundi and Tanzania. This blog reflects the views of the authors only and does not reflect the views of the Africa Growth Initiative.
The Foresight Africa blog series is a collection of blog posts from Africa experts and policymakers on what they think the top priorities for Africa should be in 2014. This blog series is part of the larger Foresight Africa project that aims to help policymakers and Africa watchers stay ahead of the trends and developments impacting the continent.
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Obama presses for “fast track” trade powers, climate action
US President Barack Obama made a public call on Tuesday for Congress to pass “fast track” trade powers, as part of a larger effort to advance ongoing negotiations with the EU and with 11 Asia-Pacific countries. Climate action was another key component of his State of the Union address, which comes after what analysts generally say was the toughest year of Obama’s presidency.
“We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment and open new markets to new goods stamped ‘Made in the USA’,” he told Congress. “Listen, China and Europe aren’t standing on the sidelines; and neither should we.”
“Fast track” powers, known formally as Trade Promotion Authority, allows the US executive branch to negotiate international trade deals and then send them to Congress for a straight up-or-down vote, without amendments. The legislation, which expired in 2007, also outlines Washington’s negotiating objectives in trade agreements.
Trade observers had been watching closely to see if Obama would call for Trade Promotion Authority in his speech, given the criticism from some Republicans that the White House has been too passive in pushing for “fast track” powers.
However, analysts have been quick to note that the president did not endorse outright the draft legislation that is currently being considered in Congress, which already promises to be controversial.
Getting members of Obama’s own Democratic Party to back TPA in any form is likely to be an especially difficult bargain, with many of them concerned both over the transparency of the negotiating process and the potential for some sectors of the US economy to experience negative impacts from lower trade barriers.
The fractious political climate has also raised questions over how many Republicans – who have traditionally shown more support for TPA – will back the measure.
The Senate Finance Committee has already held a hearing on the draft TPA legislation that was submitted earlier this month. However, the timing for next steps is unclear, given the expected departure of committee chair Max Baucus. Incoming chairman Ron Wyden has indicated that he is not ready to back the current TPA draft.
Meanwhile, in the House’s Ways and Means Committee, the timeline for advancing “fast track” renewal is even less certain. While Chairman Dave Camp, a Republican, has introduced the legislation for consideration, his Democratic counterpart in the committee – ranking member Sander Levin – has openly opposed it. Levin says he plans to introduce a rival version in the near future, without specifying a timeframe.
TPP, TTIP timeline
Trade has become an increasingly prominent part of the Obama Administration’s second term agenda, particularly as the 2015 deadline for the president’s pledge of doubling US exports from 2009 levels draws ever nearer. The White House has highlighted its planned deal with the EU, along with the Trans-Pacific Partnership (TPP) talks, as key initiatives for fulfilling that promise.
The US and its 11 Pacific Rim partners in the TPP talks are aiming to finish their negotiations in the coming months, with ministers next slated to meet in Singapore in February to try to clear up some of their outstanding differences. The timeframe for the US-EU Transatlantic Trade and Investment Partnership (TTIP) is less clear, given that the talks are still in their relatively early stages, though officials from both sides say that they want to conclude a deal quickly.
The ability to send completed trade deals – such as the TPP or the US-EU pact – to Capitol Hill for a clean vote is seen as key for the US’ trading partners in order to avoid having these agreements unravelled in Washington.
Obama: shift to clean energy economy requires “tough choices”
The State of the Union address, which is the US president’s most high-profile speech of the year, comes at a difficult time in the Obama presidency, following a year marked by Congressional infighting over subjects ranging from the US budget and debt ceiling to the implementation of healthcare reform. These difficulties, along with Obama’s persistently low approval ratings – which have been in the 40s – have been blamed for stalling efforts at passing major legislation in Washington.
A year ago, Obama made clear that he was ready to take a series of executive actions aimed at tackling climate change, in light of the continued difficulties in advancing climate legislation in the highly-polarised Congress. A few months later, he unveiled various measures that he was preparing to take as part of a broad “climate action plan” – such as imposing federal carbon limits on new and existing power plants – that would not require the approval of US lawmakers.
The decision to bypass Congress in this area had riled some lawmakers. However, Obama defended these moves on Tuesday, noting that western communities in the US are already feeling the impacts of a changing climate.
“The shift to a cleaner energy economy won’t happen overnight, and it will require some tough choices along the way,” he said. “But the debate is settled. Climate change is a fact.”
Along with defending his June climate plan, Obama also outlined a series of other goals for the year, such as reducing red tape for building new factories that can use natural gas; taking executive action to protect federal lands; and pursuing a “smarter tax policy” that would give less money to fossil fuel industry and more to renewable technologies, such as solar. The US President also pledged to set new truck standards to improve fuel efficiency, which would be announced in the coming months.
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Risk perceptions hurting investments in Africa
At the 30th Session of NEPAD Heads of State and Government Orientation Committee meeting ahead of the AU Summit the Executive Secretary of the UN Economic Commission for Africa said that risk perception, including concerns about the political, legal and regulatory environment are critical in the decision to invest. The meeting was held this week on the theme: Unblocking Policy, Legal and Regulatory Obstacles to Stimulate Investment and Enhance Infrastructure Project Bankability.
“Africa must begin to tell its own story, stressed Mr. Lopes, noting that for every publicised bad news about Africa, “be it a violent conflict, human rights infringement, shaky election process or instability, we can find the equivalent in developing Asia.”
Citing ECA’s analysis, he told the esteemed forum that the most challenging stage of project preparation is establishing the enabling environment; as well as tackling legal, regulatory and institutional impediments.
“The Trans-African Highway network was conceived in the early 1970s but today, more than 40 years down the line, missing links and sub-standard sections still constitute about 20% of the network,” he said and added that only 50% of the 708 projects of the Second United Nations Transport and Communications Decade in Africa (UNCTADA II) were completed.
Furthermore, the completion rate of projects in the NEPAD Infrastructure Short Term Action Plan (STAP) was equally low across all sub-sectors – about 15% for energy; 17% for transport; 11% for ICT; and 9% for water and sanitation projects.
“Red tape and bureaucracy are also bottlenecks in project implementation and are rank equally with a lack of finance in this regard,” said the Executive Secretary.
He asked the meeting to consider the need for sustained investment in infrastructure and commitment to devoting an adequate share of infrastructure financing in national budgets.
He also proposed the need to take steps to address negative perceptions about Africa; and the importance of adopting regional standards and policies to overcome the challenge of project implementation across multiple legal jurisdictions.
He further called for stimulating the interest of the private sector in infrastructure development, including through public-private partnerships and other innovative mechanisms.
“As we look at 2063, we will be close to 3 billion or 30% of the world’s total. If we just project our trajectory, our wealth would nevertheless be only 10%,” he said, stressing that getting to an Africa that has its deserved place in the world “requires that we change the trajectory for the better.”
The Executive Secretary also held a number of bilateral meetings with partners, Heads of States and Governments; as well as heads of various international institutions attending the AU Summit.
Source: http://www.uneca.org/media-centre/stories/risk-perceptions-hurting-investments-africa#.UuqZTxCSya8
Deal signed for Asia Africa Europe cable system
Seventeen telecommunications companies have signed a construction and maintenance agreement for the planned Asia Africa Europe-1 (AAE-1) cable system.
The cable will interconnect Hong Kong, Asia, the Middle East, Africa, and Europe and is expected to be ready for service in 2016.
It will facilitate and provide support for the unprecedented growth of Asia-Africa trade. Providing robust, reliable, low latency connectivity which underpins one of the highest growth and most active global trade routes, AAE-1 will also bring much needed protection and diversity to the existing heavily congested subsea cable systems connecting the various countries along the route, it said.
Participating operators include PCCW Global, China Unicom, Telecom Egypt, Etisalat, Omantel, and Ooredoo. PCCW Global unveiled plans to land the cable at the Cape D’Aguilar Cable Station in Hong Kong, and then extend connectivity to its city data centre.
It will be the first submarine cable linking the Far East to Europe at the possible lowest rate of delay and high transfer capacities ranging up to more than 40 terabits which will contribute significantly to the growth of the business volume in the countries passing through.
The submarine cable will connect Hong Kong, Vietnam, Malaysia, Singapore, Thailand, India, Pakistan, Saudi Arabia, Oman, United Arab Emirates , Qatar, Yemen , Djibouti, Egypt , Greece, Italy and France.
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The AU Summit and 10 years of agriculture
The 22nd African Union Summit began on Tuesday, 21 January 21 in Addis Ababa with the 27th ordinary session of the AU’s Permanent Representative’s Committee, chaired by Ethiopia’s Ambassador Konjit Sinegiorgis. It will conclude on Friday, 31 January with the end of the two-day Assembly of the Heads of State and Government.
The theme of this Summit, “Agriculture and Food Security”, was chosen in order to mark the 10th anniversary of the Comprehensive Africa Agricultural Development Program (CAADP) which was adopted by the Heads of State and Government Summit in July 2003.
Agriculture is the primary economic sector of many African countries, generating more employment opportunities and export earnings than other sectors. It is estimated that more than 65 percent of Africans derive their livelihood from agriculture, both in employment and in food production. It is the single most important sector in the continent’s macro-economic portfolio, with a conservative estimate of close to a 40 percent contribution to GDP and providing more than half of the continent’s export revenue. The vulnerability to seasonal fluctuations in food production and the all-too-frequent incidents of food insecurity, therefore, make a continent-wide policy focus on agricultural development an economic and social imperative.
This much needed policy focus was demonstrated when African leaders endorsed the Comprehensive Africa Agricultural Development Program (CAADP) at the AU’s second ordinary session in Maputo, Mozambique. The Assembly that endorsed CAADP noted that 30 percent of Africans were “chronically and severely undernourished” and that the continent was then “a net importer of food and the largest recipient of food aid”. In order to change that grim reality the Maputo Assembly declared that Africa needed to use “its full potential to increase its food and agriculture production so as to guarantee sustainable food security and ensure economic prosperity for its people”. It agreed to urgently implement the CAADP and adopt effective policies that would encourage the sector’s development domestically across the continent.
As it name signifies, CAADP aims for a rapid and comprehensive development of Africa’s agricultural sector with the stated goal of enabling African countries to attain a “higher path of economic growth through agriculture-led development, which eliminates hunger, reduces poverty and food insecurity, and enables expansion of exports”. In order to achieve these goals, African governments agreed to devote at least 10 percent of their national budgets to agricultural development and the CAADP set 6 percent as a minimum threshold for an annual agricultural productivity growth rate.
The Program focuses on four critical strategic areas that it identified as high impact and structurally valuable. The first of these pillars, as they are referred to, is to extend the area under sustainable land management and reliable water control systems. That will go a long way in terms of efficient utilization of the vast and so far unutilized or underutilized arable land on the continent.
The second pillar of the CAADP is improving rural infrastructure and trade-related capacities for market access. Considering the fact that the most severe impediments to Africa’s competitiveness in primary products are to be found in physical and structural shortcomings, investment in these areas is most essential. Africa’s infrastructure, primarily in transport and logistics, were put in place during the colonial era with the sole aim of shipping raw materials out of the continent. The absence of infrastructure relevant to domestically vibrant economies divorced from a primary feeder role has indeed held Africa’s agriculture back for decades. Improvements in both the physical and systemic infrastructure will certainly boost the continent’s productivity.
The third pillar of engagement for the CAADP revolves around ensuring food security by increasing food supplies, reducing hunger, and improving the response to food emergency crises. The fourth pillar focuses on improving agriculture research, technology dissemination and its adoption. This will provide the much needed scientific support to the sector through innovative solutions that boost productivity.
Taken in tandem with the domestic focus on agriculture by member countries, the AU’s initiative of agricultural development has effectively revitalized the continent’s agricultural sector and attracted huge foreign investment. Some African countries, including notably Ethiopia, have made agriculture development the centerpiece of their development agenda and their agricultural productivity growth rate has been instrumental in sustaining the overall economic growth of the past decade.
Ethiopia’s impressive economic performance over the past eleven years has been well publicized internationally. What has been less emphasized is the fact that the double digit growth rate (averaging 10.6 percent for the past ten years, according to the World Bank) has been made possible through intensive and extensive investment in agriculture. By earmarking an average of 15 percent of the national budget to agriculture and achieving close to 10 percent growth rates in the sector, Ethiopia has been one of the handful of countries that have met the 6 percent productivity growth rate and the 10 percent budget allocation targets set by the AU Summit in Maputo back in 2003. An additional fact is that this has enabled Ethiopia’s economic growth to have a real impact on the most vulnerable members of the society, often farmers.
In a continent where it is the most important economic sector both as a source of people’s livelihood and as the source of the largest contributions to GDP, the historical neglect of policy makers towards agriculture have resulted in devastating humanitarian crises. The meager overall level of investment in the sector from both public expenditure and private finance has proved disastrous for Africa’s economic prospects and its human capital development. A rejuvenated agricultural sector is not only necessary to increase income levels for the majority of people who live off the sector but also ensure food security through increased food supply and lower costs.
To mark the tenth year anniversary of the CAADP, the 22nd Ordinary Session of the Heads of State and Government is expected to declare 2014 the “Year of Agriculture and Food Security”. In addition, the Summit will also hear reports on the implementation of previous decisions, on the activities of the Union’s Peace and Security Council, of NEPAD and of the activities of the High-Level Committee on the Post-2015 Development Agenda, as well as other pertinent reports. The Summit will also appoint ten new members of the Peace and Security Council to serve for the next two years as well as choose the new Chairperson for the African Union for 2014.
This article originally appeared in A Week in The Horn of Africa, a newsletter that focuses on economic developments in the Horn of Africa region.
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African countries need united action on infrastructure development – AU chairperson
AU Commission Deputy Chairperson, Erastus Mwencha, on Tuesday called on African countries to unite in implementing the continent’s approved programme for infrastructure development.
“We need to harmonise our vision and strategies and act together toward a common destination,” he told the first meeting of the Council for Infrastructure Development (CID), being held on the margins of the 22nd Ordinary Session of the AU Assembly.
Taking part in the meeting are ministers responsible for infrastructure development and transport as well as chief executives of regional economic communities.
Mwencha, who chaired the meeting, said that Africa’s infrastructure was one sector that has a huge deficit in terms of implementation and funding.
Underscoring the need for effective supervision of projects, he urged the CID to get involved in improving the connectedness of the continent, saying it should be seen as an action Council.
In 2012, African heads of state and government approved the Programme for Infrastructure Development in Africa (PIDA) with a resolution to undertake institutional reforms, conducive to the creation of a favourable business climate for private investment in infrastructure.
They also resolved to promote financing mechanism reflecting a commitment to speed up infrastructure development on the continent.
In the priority action plan for 2012 to 2020 of PIDA, 51 projects and programmes were identified, calling for a total investment of 68 billion dollars.
Of these ventures, 24 are in the transport sector, 15 for energy, nine for trans-boundary water and three for information, communication and technology (ICT) development.
The transport programme is aimed at linking major production and consumption centres, providing connectivity among major cities, defining the best hub ports and railway routes and opening land-locked countries to improved regional and continental trade.
According to the PIDA outlook to 2040, US$ 360 billion was required as capital cost for the development of 37,300 km of highways; 30,200 km of railways; port added ton capacity of 1.3 billion tons; 61 099 MW hydroelectric power generation; and 16,500 km power lines interconnection.
The trans-boundary water programme targets development of multipurpose dams and the capacity of lakes and river basin organisations so they can plan and develop their own water-based infrastructure, besides addressing food needs for Africa’s population.
Meanwhile, the ICT programme seeks to establish an enabling environment for completing the land fibre optic infrastructure and installing internet exchange points in countries that lack such.
Mwencha said that the one-day CID meeting was scheduled to set up an implementation mechanism for the PIDA projects and programmes toward attainment of Africa’s Agenda 2063 on the overall continental development.
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South Africa was continent’s top FDI recipient in 2013
Foreign direct investment flows to Africa increased nearly 7 percent to an estimated $56 billion last year, nearly a fifth of which went to top recipient South Africa, a United Nations report said on Tuesday.
Africa, along with Latin America and the Caribbean, helped drive FDI inflows to developing economies to a new high of $759 billion in 2013. That was more than half of global FDI, the United Nations Conference on Trade and Development said in its latest Global Investment Trends Monitor.
Sub-Saharan Africa’s robust economic growth, which the IMF expects to increase to 6.1 percent in 2014, from 5.1 percent last year, has made it an attractive destination for investors.
South Africa’s performance has lagged the rest of the region, however, with the IMF forecasting growth of 2.8 percent in the continent’s biggest economy this year, an increase from 1.8 percent in 2013.
Investors have also been unnerved by recurrent labour unrest, most recently a platinum mining strike that began on Thursday which has hit half of global output of the precious metal.
Despite these woes, FDI inflows to South Africa more than doubled to $10.3 billion in 2013, UNCTAD said, while other African countries like Nigeria and Ghana saw a decline in investment.
Most of the rise in FDI flows to South Africa was due to greenfield, or new investment, particularly in the consumer goods sector, said Masataka Fujita, head of UNCTAD’s investment trends and issues branch.
Mozambique, where companies like Brazil’s Vale, London-listed Rio Tinto and Italy’s Eni are developing huge offshore gas and coal deposits, was another strong performer, attracting inflows of $7.1 billion, up more than 30 percent from a year ago.
Inflows to Africa’s top crude oil producer Nigeria declined about 20 percent to $5.5 billion, the report said, largely due to asset sales by foreign oil companies such as Royal Dutch Shell and Chevron.
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Azevêdo calls Bali “a leap forward in favour of developing countries”
Director-General Roberto Azevêdo, in a speech at the Confederation of Indian Industry Partnership Summit in Bangalore on 28 January 2014, said that “besides being a boost to the WTO as an institution, what we delivered in Bali has tremendous economic significance and will improve the lives of millions around the world”. He said: “The work has only just begun – and we have the chance to make 2014 the year that the Doha round is put back on track. It will not be easy, but it is achievable. I hope that together we can capitalise on the success in Bali, and seize the opportunity that it has provided.” This is what he said:
Ministers,
Ladies and gentlemen,
I’m delighted to be here today.
When I addressed the CII in New Delhi, October last year, the future of the multilateral trading system was in doubt.
I’m happy to say that the outlook is very different today – and very much more positive.
I want to thank you for your help in delivering the success in Bali.
In October I called on you, as the Indian business community, to lend your support to the Bali package – and you did so.
I also want to welcome the excellent joint work that the CII has been doing with the WTO.
Our joint report: “India-Africa: South-South Trade and Investment for Development” was very well-received. And of course there is more that we can do.
India is an important global player, particularly in South-South development cooperation. This work could be made even more effective by increasing private sector involvement – and who better than the CII to do this.
I also want to give my sincere thanks to the Indian Government for their support in delivering the Bali package – and particularly Minister Sharma.
Minister Sharma played a key and positive role in Bali, ensuring not only that the package would deliver meaningful outcomes, but also that it would be balanced so that consensus could be found.
There is no doubt that Bali was a very significant achievement.
After 18 years without agreements, the WTO proved that it can deliver negotiated outcomes. And it moved the spotlight back onto Geneva.
But Bali has not finished the job – rather, it has provided us with the opportunity to make progress in other areas – and to conclude the Doha round.
However, this is not the only dimension of the Bali agreements. Besides being a boost to the WTO as an institution, what we delivered in Bali has tremendous economic significance and will improve the lives of millions around the world.
BALI – ECONOMIC IMPACT
This is especially relevant in light of the uncertainties of the post-crisis recovery endeavours. The global economic picture remains mixed and trade must do its part in providing development and job opportunities everywhere.
Of course India, like others, is not immune to the lingering effects of the crisis and to developments outside her borders. The Bali agreements came at a time of high volatility in transnational capital flows, slow growth, widespread inflation and deflation concerns, high unemployment in many countries, and far-reaching economic ripples triggered by monetary and fiscal policies in major markets.
The Bali package could not be more propitious.
Economists forecast that by speeding up and streamlining customs procedures the Bali package will provide a significant boost to the global economy. Some maintain that it is worth up to $1 trillion per year, with the capacity to generate up to 21 million jobs across the developed and developing world.
As businesspeople you will appreciate what a 10-15% change in import and export costs could mean for your margins.
In addition it could bring increased investment in trade-related infrastructure, particularly in the less developed nations. It will certainly support the rapid growth in India’s trade with Africa – helping to reach the US$ 100 billion mark by 2015.
The Trade Facilitation Agreement, a critical piece of the Bali deliverables, has important milestones for implementation over the coming months. Our ability to move the WTO agenda forward hinges on our ability to fulfil the promises contained in that agreement, especially in providing timely and effective technical assistance and capacity building wherever it is demanded in the developing world.
This is an important test for the system – and one which we must pass if we want to see these benefits made real.
We all have a role to play here in keeping up the momentum and the pressure that allowed us to reach a successful agreement in the first place.
I hope I can continue to count on your support in this effort.
BALI – DEVELOPMENT OUTCOMES
But, as you know, trade facilitation was just one part of the Bali package. WTO Members agreed to 10 texts altogether, many of them focused on issues of great interest to developing and least developed countries – the LDCs.
For example, Ministers agreed on a set of specific measures aimed at helping the least-developed countries to increase their exports and to better fit into the global patterns of production. The texts agreed in Bali establish:
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Further commitments to duty-free-quota-free market access,
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Guidelines for simple, transparent and flexible rules of origin for exports from LDCs, and
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Improvements in market access opportunities for service providers from the LDCs.
In addition, the Bali package will create a new mechanism that will monitor and improve the operation of provisions that grant special and differential treatment to developing countries.
This has been a longstanding demand of many developing countries – and India has been a leading voice.
Some have raised concerns about the non-binding nature of some of the texts of the Bali package.
But the Bali decisions are a first step – they are meant to be built on, as ministers themselves recognised in their declaration there. Besides, the Bali ministerial Declaration also determines that these non-binding decisions will be a priority in our post-Bali work.
Overall, Bali represents a leap forward in favour of developing countries, breaking new ground in the norms that underpin the multilateral system.
And this was clear in Bali. Developing countries fought for the package just as hard as anyone.
BALI – FOOD SECURITY
Of course, ministers took another very important decision in Bali – on food security.
This measure provides protection to developing countries from legal challenges at the WTO, arising over public expenditure incurred while stockpiling staple foods for subsequent distribution to the poor.
India fought hard to secure agreement on these food security provisions, which will provide important safeguards for India and other developing countries in pursuit of their food security objectives.
And I have no doubt that India will be a central player in the upcoming negotiations to find a permanent solution to this issue.
More broadly, I have no doubt that India will play a leading role in drawing up the post-Bali work programme.
POST-BALI – PARAMETERS
This work programme is not only about implementing the Bali outcomes. The Bali declaration also instructs us to get the talks going again and to prepare, by the end of 2014, a clearly defined work program on the remaining Doha Development Agenda issues.
In order to look forward, we must learn from the mistakes and achievements of the past. Bali offered us a number of good lessons in how to be successful multilaterally. But it will be very difficult to replicate the approach where we avoided the core issues – agriculture, industrial goods, services – and found harvests elsewhere.
Most likely, any future multilateral engagement will require outcomes in agriculture. This was a central pillar of the DDA and, if agriculture comes into play, so do the other two legs of the tripod: industrial goods and services.
We may even conclude that we’re not yet ready to properly tackle these three areas, but we can’t avoid the conversation.
Even though we can’t replicate Bali precisely, there are lessons learned that we must keep in mind. Our dialogue about the future is just beginning, but I believe that some parameters seem to be already framing this conversation.
I will talk through these parameters now – though I stress that this is not an exhaustive list, nor is it arranged in order of priority or importance.
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The first is that we must be realistic and focus on those things which are doable. Instead of abstract goals, let’s look at what we can do and set goals that are reachable. Members have to be honest to each other and to their domestic constituencies about what can realistically be expected from the negotiations. We must find a balance between ambition and realism.
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The second parameter is that the big issues in the DDA are interconnected, and therefore they must be tackled together. So, again, as it was in Bali, balance is key. We must find an approach in which all members contribute and all members benefit. But, again, no one is faced with impossible demands.
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Third, in order to make headway in these areas, we must be ready to be creative and keep an open mind to new ideas that may allow members to overcome the most critical and fundamental stumbling blocks. This creativity, however, has to be coherent with the DDA mandates, which are flexible enough to accommodate new paths.
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Fourth, we cannot forget that development has to be preserved as the central pillar of our efforts. Above all, we must have tangible results for the poorest members.
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Fifth, the process must continue to be inclusive and transparent, engaging all members at all stages of the negotiations.
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Sixth, our efforts must have a sense of urgency. This was an essential element of the success in Bali. We must be careful, however, not to rush recklessly into another cycle of failures due to bad planning.
Finally, I also think we should be open-minded about how far-reaching our next steps will be.
Of course what we want to do is to find a path towards conclusion of the round. It may be that it can be done in one step – or we may need more than one step. That is something that we have to discuss.
CONCLUSION
Bali announced to the world that the WTO – and the multilateral system – are back in business.
Like Minister Sharma, I have just been in Davos, and the number of references to Bali and to the work of the WTO surprised me.
There is political momentum and we must build on it.
The work has only just begun – and we have the chance to make 2014 the year that the Doha round is put back on track.
It will not be easy, but it is achievable. I hope that together we can capitalise on the success in Bali, and seize the opportunity that it has provided.
Thank you – I look forward to our discussion.
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Africa and India cultivate agricultural research ties
Africa and India are gearing up to further enhance cooperation in agricultural science, technology and innovation, and move beyond dialogue to a range of practical options from a virtual biotech platform to agribusiness centres, seed investments and even joint donor-aided projects.
Willy Tonui, chief executive officer of Kenya’s National Biosafety Authority, said that studying how India has resolved development problems could help overcome similar challenges across Africa.
“India has developed solutions to its unique environmental and cultural challenges. We could learn from it,” he told SciDev.Net at a meeting on science, technology and innovation cooperation between Africa and India in New Delhi last October.
The meeting, which included ministers, heads of biotechnology organsiations, seed industry representatives, officials and scientists, generated a slew of proposals to enhance agricultural collaboration. The ideas from the meeting will feed into a larger Africa-India summit slated for 2014 in Delhi.
S. R. Rao, an advisor to the Department of Biotechnology in India’s Ministry of Science and Technology, suggested creating an Indo-African, open-access biotechnology virtual platform that would offer a roster of experts and enable knowledge to be shared on a range of techniques and biotech-related sectors such as fisheries, horticulture and animal health.
Some other proposals that emerged from the meeting were to set up agribusiness centres to promote entrepreneurship and provide services, and to form joint agricultural projects to boost the chances of getting donor funding.
Diran Makinde, director of the African Biosafety Network of Expertise, which was set up to help the continent’s regulators make decisions on biotechnology products, told SciDev.Net that Africa would benefit from cooperation with India in several fields. These include: developing technological and professional competence; upgrading technology infrastructure; stimulating collaborative innovation and entrepreneurship; and providing an enabling science, technology and innovation environment.
Similar farming systems
As a partner, India is “handy because of the similarities in our farming systems”, Makinde said, referring to the smallholdings typical of both African and Indian agriculture.
Another useful insight for Africa is to learn how India has boosted the domestic production of seeds.
“Only about ten per cent of [African] farmers use hybrid seeds, which was the same in India some two decades ago, and this scenario may not enable us to achieve food and nutrition security in Africa, which is our top priority. In addition, there has been a lot of regulatory experience and data accumulated in India that may benefit African regulatory systems,” he told SciDev.Net.
The meeting in New Delhi was an offshoot of joint summits in 2008 and 2011. As a result of these, Africa and India are already implementing science and technology initiatives in: capacity building, development, and knowledge transfer and adoption in common priority research areas.
The initiatives cover: fellowships for African researchers to work in Indian science institutes; training African researchers in areas such as biomedical sciences, technological innovation, energy, environment and sustainable development; strengthening research institutes in Benin, Gabon and Tunisia; and the transfer and adoption of small- and medium-scale technologies.
Sachin Chaturvedi, a senior fellow at Research and Information Systems for Developing Countries, an Indian think-tank, tells SciDev.Net that various concrete proposals emerged from the meeting. These included agreement on setting up laboratory standards for seeds and other sources of genetic materials such as plant tissues; establishing seed incubator facilities for private-sector entrepreneurs in Africa; and building Africa’s capacity for seed research.
He says that India’s government has agreed, in principle, to fund agricultural cooperation, but the details must still be worked out.
Seeds challenge
A major challenge to African agricultural technology development is ensuring that seed production is of sufficient quality, and the availability and affordability of those seeds, says George Marechera, business development manager at the African Agricultural Technology Foundation, which promotes public-private partnerships to assist smallholder farmers in Sub Saharan Africa.
This is because most African seed production systems are still informal, farmer-based and low-yielding, he adds.
Despite the availability of several easily adaptable, high-quality, international seed production technologies – including improved techniques for seed selection, treatment and storage – there is a lack of coordination between producers, researchers and suppliers, Marechera says.
Similarly, there is no mechanism for linking these technologies with African seed companies that could roll them out.
Africa needs an innovative business model for seed access and delivery, Marechera says, adding that Africa and India could collaborate in seed production.
He suggests that India’s model of small seed companies, which require less investment, has potential in Africa.
Other joint efforts on seeds are under way. Africa and India are running trials under the Syngenta Foundation for Sustainable Agriculture’s India-Africa Seed Bridge project designed to link plant breeders with new seed production and distribution channels in emerging markets.
These include crops such as sorghum, millet, sunflower, tomato, onion and sesame, as well as maize that requires less water than traditional varieties, cowpea that is resistant to the pod borer moth, salt-tolerant rice and bananas that are resistant to the fungal ‘wilt’ disease.
And Bamidele Solomon, former director general of Nigeria’s National Biotechnology Development Agency, says biotechnologists from his country are meeting India’s agriculture ministry and seed company associations to build links with partners who could help Nigeria’s mission to grow genetically modified cotton, based on India’s success in the sector.
Nigeria and India could also increase collaboration in capacity building, technology transfer and the development of infrastructure such as modern laboratories in the agriculture sector, he says.
Links through international institutes
Several international research institutes are engaged in collaboration programmes between Africa and India. For example, the Nairobi-based International Livestock Research Institute is engaged in programmes focusing on animal genetics, animal feeds and animal health that involve Ethiopia, Kenya, Mali, Mozambique and Tanzania as well as India.
“India-Africa knowledge management should move beyond the movement of messages to technology dissemination tools and approaches, and linkages to agricultural education,” says Purvi Mehta-Bhatt, the institute’s representative for South Asia.
The two partners should develop joint projects to attract donor funding, set up institutional collaboration and document, monitor and evaluate their experiences, she says.
Similarly, New Delhi-based The Energy and Resources Institute is running collaboration initiatives including policy dialogues, policy research knowledge sharing, institutional capacity building and grassroots demonstration projects on areas such as biotechnology and sustainable development.
And the International Crops Research Institute for the Semi-Arid Tropics, whose headquarters is near Hyderabad, will use its Agribusiness and Innovation Platform initiative to help set up agribusiness incubators for farmers across Africa, along the lines of its networks of incubators in India.
BRICS build inroads into Africa
India’s engagement reflects the growing involvement by five of the major emerging economies – Brazil, Russia, India, China and South Africa (BRICS) – in agriculture across Africa.
“African agricultural policymakers are increasingly looking to the BRICS countries not only as investors and suppliers of technology, but also as sources of examples to be emulated, whether in large-scale commercial farming or in mass mobilisation to boost smallholder productivity,” notes a July 2013 bulletin by UK-based research organisations the International Institute for Environment and Development and the Institute of Development Studies.
The bulletin notes that the use of Brazilian technologies to improve soils and boost production is now seen by some as a model for Africa, and agricultural research collaborations between the two are growing. In addition, the bulletin says the continent is learning from China’s achievements in consolidating smallholder farms and developing large-scale mechanised farming.
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“Africa needs to speak with one voice”, says Commissioner Fatima Haram Acyl
The Commissioner for Trade and Industry of the African Union, Mrs. Fatima Haram Acyl, gave an assessment of the role of existing African Union trade and industry frame works for the economic integration of African countries, and underlined the need for African countries to speak with one voice. The Commissioner was speaking while addressing a press conference on 27 January 2014, at the AU headquarters in Addis Ababa, Ethiopia. She expressed concern that the inability of African countries to coordinate and adopt a coherent approach at international negotiations is obstructing their economic productivity. The Commissioner attributed the inability to agree on a coordinated economic effort to the unequal level of development amongst African countries.
Commissioner Acyl explained that dependency on commodity and unprocessed raw materials will not allow Africa to achieve its vision of an integrated, people centered, prosperous Africa. She underlined that, to realize this vision as part of Agenda 2063, there is a need for economic transformation of African countries and wealth creation for Africans. The Commissioner further explained that the road to realizing such objectives begins with implementing existing frameworks such as PIDA (Program for Infrastructure Development in Africa), CADDP (Comprehensive Africa Agriculture Development Program), BIAT/CFTA (Continental Free Trade Area), AMV (African Mining Vision) and AIDA (Accelerated Industrial Development for Africa).
The Commissioner for Trade and Industry reported that, with regards to trade and industry, in particular with the BIAT/CFTA, AMV and AIDA frameworks, the Commission has taken initiatives to enhance the impact in these areas. She added that, in terms of the CFTA the Commission is in the process of setting up an African Trade Observatory to gather and analyze trade and industry statistics, a CFTA secretariat to work with member states and regional economic communities and prepare for the CFTA negotiations in 2015, and an African Business Council to integrate private sector stake holders within the decision making process of the commission.
The Commissioner also advised the need to focus on investing in African people and introducing initiatives to take advantage of Africa’s increasing population. According to Commissioner Acyl, the suggestion comes in light of the expectation that 25 percent of the world youth under 30 years will be in Sub-Saharan Africa 10 years from now and considering the projection that Africa’s population will increase from 15 percent of the world population in 2013 to 23 percent by 2050.
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AU urges Africa to deepen economic integration to eradicate poverty
African Union Commission Chairperson Nkosazana Dlamini-Zuma on Monday called on Africa to deepen economic integration in order to eradicate widespread hunger and poverty on the continent.
Dlamini-Zuma made the call at the opening of the 24th Ordinary Session of the African Union Executive Council.
“We are today more convinced than ever, that we shall not succeed in eradicating poverty, disease, conflict and hunger and provide a better life for the peoples of our continent unless we have greater integration of our economies,” the AU Commission chairperson said.
She said mineral beneficiation, increased industrialization and agricultural production were also key to accelerating development on the continent.
With the upcoming 22nd Ordinary Session of the AU Assembly running under the central theme, “Agriculture and Food Security”, Dhlamini-Zuma said agriculture and agro-processing were critical to ensuring sustained and inclusive growth of 7 percent and higher in Africa.
The continent, she said, would in 2014 focus more on increasing agricultural investment and productivity; growing agro-business and value chains; expanding infrastructure; skills; and research for agriculture in pursuit of the Comprehensive African Agriculture Development Program (CAADP) goals.
Agriculture constitutes a large part of Africa’s gross domestic product.
Dlamini-Zuma said Africa should also take practical steps to ensure it has a greater say on the pricing of its agricultural products.
“In particular, we will take special measures to ensure that women, who are the largest part of the agricultural work force and food producers, have access to training and capital, and are supported to form cooperatives,” she said.
The chairperson of the Executive Council, who is also Ethiopian Foreign Affairs Minister, Tedros Adhanom Ghebreyesus told the same meeting that Africa needed to sustain its high economic growth trajectory over the coming decades in order to lift millions of its people out of poverty.
“That is why we need to bring about structural transformation by promoting economic diversification and industrialization with a view to ensuring inclusive growth and creating jobs for the unemployed,” he said.
Addressing the same meeting, Executive Secretary of the Economic Commission for Africa (ECA) Carlos Lopes lamented the fact that despite holding immense natural resources, Africa was the world’s most food insecure region.
Around 226 million people, or one out of every five people in Africa, were chronically food insecure, he said.
He bemoaned Africa’s inadequate funding to agriculture, saying the continent was yet to use the sector as a socio-economic transformation tool.
He pointed out that over 15 billion U.S. dollars had been spent on Africa’s agriculture over the past two decades and yet the continent was still grappling with the problem of malnutrition. Africa, he said, needed to undertake an agricultural revolution involving systematic improvements in production, processing, storage and use to take its people out of poverty, noting that countries that had succeeded in poverty alleviation had done so through agricultural revolutions.
He cited Brazil, China and India as examples.
Food security should be approached economically and not as a poverty reduction program, he urged Africa.
Lopes proposed the “6 R” strategy to transform Africa’s agriculture, focusing on reducing the vulnerability of small-scale farmers and remaining firm against unfair trade policies, among others.
He argued that agricultural subsidies offered by most developed countries distort international commodity prices thereby making farming by African farmers unprofitable.
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WTO members gear up for trade facilitation deal
A number of World Trade Organization (WTO) members agreed on Saturday to step up efforts to implement a trade facilitation deal that could add US$1 trillion to the global economy.
The commitment was achieved during a mini-ministerial meeting of the WTO attended by 22 countries, including the US, the European Union (EU), Australia, China, Japan, South Korea, South Africa, Nigeria, Switzerland and Turkey and WTO director general Roberto Azevedo, on the sidelines of the World Economic Forum (WEF).
Developed nations had expressed their preparedness to provide financial aid for technical assistance to developing and least-developed countries in order to implement the deal, said Trade Minister Gita Wirjawan.
“The next step will be to formulate the types of suitable assistance,” he said after the meeting.
The trade facilitation deal was one of the three accords achieved during the 160-member WTO ministerial meeting in Bali last December, marking its first-ever global trade deal since its creation in 1995.
The other two accords pertained to measures to enhance agriculture in developing countries, including temporary protection for food security programs and a reform of export subsidies, and to promote exports in least-developed countries through duty-free quota-free market access and simplified rules of origin.
Concrete actions to materialize from the so-called “Bali package” are expected to be completed in 12 months.
The trade facilitation agreement aims to simplify customs procedures and ease the flow of goods and services across nations, such as through uniform documentation requirements for the release and clearance of goods, reduce transaction costs.
It could create up to 21 million jobs and generate expansion of up to 10 percent in developing country exports and 4.5 percent in developed country exports, according to the WTO’s estimate.
A preparatory committee to formulate the technical details for the implementation of the trade facilitation agreement would be established soon, said Trade Ministry director for APEC and other international organizations Denny Kurnia.
The committee would lay out a protocol with July this year as the deadline to implement the agreement, he said.
“If the protocol is ready, it will be offered to member countries for approval,” Denny said, adding the trade facilitation agreement could come into effect when a minimum of two-thirds of the members had accepted the protocol.
Indonesia will have to issue a presidential decree to ratify the protocol and also change contradictory regulations, such as the Customs Law, according to Denny.
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Rules and tools for Africa’s growth
After several decades in the shadows, Africa has entered the spotlight as one of the best investment destinations since the economic crisis of the West. The tone has changed from dramatically negative in the 1990s to overly positive in the last five years. Indeed, Africa’s investment climate has improved, and many African jurisdictions have equipped themselves with new and adapted regulations, sometimes breaking radically from their colonial roots. Another key development is the recent regained momentum of regional integration and consequently improved regional legal and regulatory regimes.
Africa’s Investment Climate Has Dramatically Improved
African economies are showing impressive growth. With an average GDP growth forecasted to be 6.3 percent in 2013, Africa has become the fastest growing region in the world, and only a few Asian countries will continue to grow faster than the continent’s top performers. In addition, the debt to GDP ratio has reduced and become stable with an average of about 33 percent (in comparison to above 85 percent for the European Union and around 100 percent for the US). The times of sextillion percent inflation rates (which were the inflation rates reached in Zimbabwe in 2008 before it abandoned its own currency) are also gone. The average inflation in Africa is now around 8 percent.
The political environment is a lot more stable. Between the 1960s and the fall of the Berlin Wall, Mauritius was the sole African country where a ruling party or government was peacefully voted out. Since then, there have been more than 30 examples of democratic elections resulting in a change of power (such as Zambia and Kenya recently). Only four jurisdictions in Africa do not have a multi-party constitution. Coups still occur but they have become less the norm.
So, strong continuous growth, limited sovereign external debt, controlled inflation and more stable political environment constitute clear and compelling signals to investors. In addition, deep regulatory reforms are improving the legal landscape.
African Regulatory Reforms in Ebulltion
There is no doubt that laws have now become a priority for many African jurisdictions, and although most of them are simply modernizing the laws they inherited during colonization, a few countries are adopting fundamental changes. In many jurisdictions, the laws were “frozen” following the end of colonization. However, in the last two decades, thanks to improving political stability and increased investment, African jurisdictions have concentrated on updating their laws. For example, Libya, Zimbabwe and Egypt have recently adopted a new constitution. Malawi is in the process of revamping all its laws. Liberia, South Sudan and Somalia have started legislating for the first time in over 30 years. Rwanda, for example, switched from its 19th century Belgian civil law systems roots to common law a few years ago. Rwanda replaced French with English as its primary business language. These amendments, although partly politically motivated, were mainly put in place to improve Rwanda’s overall business environment. From 158th position in the World Bank’s 1998 Doing Business survey ranking countries according to their ease of investments, it jumped to 48th position in 2012. In fact, Rwanda was the first country in the world to voluntarily adopt a common law legal system.
The other popular change, which has been made by many African countries upon achieving independence was the rebalancing of property ownership. Although often contested by foreign investors, indigenisation laws and quotas have been introduced in some African jurisdictions. For example, in South Africa where almost 80 percent of the population is black, it was judged necessary to pass the Black Economic Empowerment Act in 2003 to readjust the inequalities generated by decades of apartheid. With respect to land, many countries removed the ability for anyone to own freeholds, leaving individuals with long leaseholds (such as Nigeria or Zambia). Some countries go further and discriminate between foreigners and citizens (for example in Kenya, last year, foreigners suddenly woke up one morning with their freehold having been converted into a 99-year leasehold). It may be worth highlighting that many Western and emerging countries have some property ownership restrictions (such as Switzerland, the Channel Islands or China). It is, however, interesting to note that Rwanda, one of the world’s biggest business reformers, refused to go down that route, and both locals and foreigners can own freehold properties.
However, despite all the recent economic, political and regulatory improvements and despite accounting for about 15 percent of the world population and representing more than 20 percent of the land area on earth, Africa’s GDP is still less than 4 percent of the world is total GDP. Indeed, the GDP of the all the 54 African countries is less than Brazil’s GDP and about one-quarter of China’s GDP. Africa will not be able to compete if it remains a legally and economically fragmented region (however good and competitive each individual state is). For this reason, regional integration has once again become a hot topic.
Regional Integration: A Regained Momentum
Dr. Mo Ibrahim urged the heads of state across Africa at the Dialogue on Africa in 2011 to prioritise regional integration as there are too many sub-scale African countries which are economically unviable. This statement reflects the focus on regional integration by not only governments, but civil society and business as well.
The East African Community (“EAC”), which regroups Kenya, Uganda, Tanzania and since 2009 Burundi and Rwanda, is a good example of progressive regional integration on several fronts. Although this organisation was created in 1967 as a result of long historical cooperation between Kenya, Uganda and Tanzania, it collapsed in 1977, and took more than 30 years to be revived by treaty in 1999 which came into force in 2000. However EAC now has a common external tariff, an internal trade and common customs procedures. It is also working hard towards a common currency. Nevertheless, this regional organisation is small with only 105 million people and represents a limited part of the African market. Also, EAC does not share the same business laws like OHADA.
West Africa, too, must be lauded for its progress. OHADA (which is an acronym for the Organisation pour l’Harmonisation en Afrique de Droit des Affaires) was created in 1993 and now (with the addition of the Democratic Republic of Congo in 2012) groups 17 African jurisdictions. OHADA is pioneering: it gives all its members one set of business laws, one Supreme Court, a council of ministers and a permanent secretariat. OHADA’s uniform acts are directly applicable in all the member states. However the number of OHADA uniform acts is currently limited to key business laws and does not deal with free movement of goods and common tariff like EAC. There are however two sub-groups of OHADA countries which have formed the only two common currency unions in Africa: Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo share the West African CFA Franc and Cameroon, Central African Republic , Chad, Republic of Congo, Equatorial Guinea and Gabon share the Central African Franc.
There are various other regional organisations such as COMESA, SADC or ECOWAS. However the main issue is that many states belong to different overlapping organisations dealing with different priorities. A solution lies not only in the private sector promoting cross border trade, but also in development banks such as the African Development Bank, the Eastern and Southern African Trade and Development Bank (PTA Bank) and so on use development finance of infrastructure and trade to unite countries.
Conclusion
Africa has all the ingredients for success: growth, increased stability, improved regulations and focus on regional integration. Although the AU’s plans seem ambitious at present, one thing is clear: Africa is firming up its own legal structure. The use of cut and paste legacy laws is dwindling. In addition, the continent has diversified its trading partners and no longer relies solely on Europe, the U.S. or China. Intra African trade, though still less than 15 percent of the continent’s trade, will surely increase with improvements in infrastructure and increasing trade finance. Increased manufacturing and production value added goods (with improved trade facilitation measures, of course) will encourage greater internal consumption. The success of Africa’s integration will be based on the full cooperation between political leaders, citizens and a unified mission for sustainable and inclusive growth for all. The laws and regulations are increasingly in place, now action is left to the people.
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Circular economy can generate US$ 1 trillion annually by 2025
Over US$1 trillion a year could be generated by 2025 for the global economy and 100,000 new jobs created within the next five years if companies focused on encouraging the build-up of “circular” supply chains to increase the rate of recycling, reuse and remanufacture. This would maximize the value of materials when products approach the end of their use, according to a new report released today by the World Economic Forum, in collaboration with the Ellen MacArthur Foundation at the Annual Meeting 2014 in Davos.
The report, Towards the Circular Economy, analyses the economic benefits for businesses shifting towards a circular economy, which rethinks today’s consumption patterns of “take, make and dispose” to a more restorative process, where products are designed and marketed such that components and materials can be reused many times. The report also highlights a new Forum initiative, Project Mainstream, which could help businesses to shift towards a circular economy and as a result save US$ 500 million in materials and prevent 100 million tonnes of waste globally.
“The circular economy is an opportunity industry can’t afford to miss,” said Sir Ian Cheshire, Group Chief Executive of Kingfisher. “It can drive our next generation of innovation and business growth, cushion our business from price volatility, provide us with competitive advantage, and help us build better relationships with customers and suppliers.”
With commodity prices almost tripling in the last 10 years, businesses and governments are now recognizing this as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources. Manufacturing industries, in particular, could see their costs reduce significantly by adopting a circular business model. For example, material costs of smartphones could be reduced by more than 60% by entirely rethinking the way they are made and disposed. The report also shows the benefits of innovative business models such as Airbnb and Zip Car, and suggests improvements for profitability throughout the supply chain.
Project Mainstream is a World Economic Forum initiative in partnership with the Ellen MacArthur Foundation and supported by McKinsey & Co, which aims to work with companies to tackle ways to enable the circular economy through materials management, information technologies and business model innovation. There are already many industry leaders that have committed to be part of this effort, including Philips, Kingfisher, Veolia, DSM and Indorama.
“Building on growing momentum around the circular economy, Project Mainstream will leverage the convening power of the World Economic Forum and bring together a group of business leaders capable of triggering widespread innovation and employment. It is about going beyond concept stage, it’s about turning proven potential into an economic reality,” said Ellen MacArthur, Founder of the Ellen MacArthur Foundation.
The 44th World Economic Forum Annual Meeting is taking place from 22 to 25 January 2014 under the theme The Reshaping of the World: Consequences for Society, Politics and Business. More than 2,500 participants from 100 countries are taking part in the Meeting. Participants include more than 30 heads of state or government and 1,500 business leaders from the Forum’s 1,000 Member companies, as well as Social Entrepreneurs, Global Shapers, Young Global Leaders and representatives from civil society, media, academia and the arts.
The Co-Chairs of the Annual Meeting 2014 are: Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria; Kris Gopalakrishnan, President, Confederation of Indian Industry (CII); Vice-Chairman, Infosys, India; Jiang Jianqing, Chairman of the Board, Industrial and Commercial Bank of China, People’s Republic of China; Joseph Jimenez, Chief Executive Officer, Novartis, Switzerland; Christophe de Margerie, Chairman and Chief Executive Officer, Total, France; Marissa Mayer, Chief Executive Officer, Yahoo, USA; and Judith Rodin, President, Rockefeller Foundation, USA.
About the circular economy
Restorative by design, the circular economy is built on the principle that stocks and flows of resources are rebuilt as opposed to degraded. This results in lower, and less volatile, costs, and holds huge potential for innovation and job creation. The circular economy aims to decouple economic growth from resource consumption. Project Mainstream can help mobilize this interest into an avenue for cross-industry action capable of taking the circular economy to the tipping point.
Click here for more information about the WEF Annual Meeting 2014.
Source: http://www.weforum.org/news/circular-economy-can-generate-us-1-trillion-annually-2025?news=page
Download: “Towards the Circular Economy: Accelerating the scale-up across global supply chains” (64 pages, 4.48 MB)
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West Africa, EU to resume EPA negotiations
West Africa and the European Union will resume their suspended Economic Partnership Agreement (EPA) negotiations for the creation of a free trade before the end of January.
This information is contained in a statement issued by ECOWAS Assistant Director of Communication, Mr Sunny Ugoh, in Abuja on Thursday.
The statement said that the resumption of the negotiations followed the directive by the ECOWAS extraordinary summit in Dakar in October 2013 calling for flexibility in the process.
“The summit also directed West Africa’s chief negotiators to expeditiously resume negotiations with their European partners with a view to concluding a regional agreement as soon as possible,’’ it said.
The statement said that negotiations were suspended in 2012 following divergences mainly over market access offer and the EPA Development Programme (EPADP).
It also described EPADP as a dedicated funding programme to enable West Africa cope with the cost of adjustment to the impending trade regime.
The statement said that initially, West Africa had offered to open 60 per cent of its market over 25 years which it later revised to 70 per cent over the same period.
It stated that the EU had maintained its original position of an 80 per cent market opening over 15 years.
The statement also stated that West Africa, comprising the 15 ECOWAS Member States and Mauritania, also asked for 15billion Euros in new funds for the EPADP.
It stated that the European Union insisted that the programme should be funded from existing bilateral and multilateral contributions.
The Dakar meeting would be led by Directors of trade of ECOWAS and the West African Economic and Monetary Union (UEMOA) Commissions.
“Others are the European Union officials and representatives of ECOWAS ambassadors in Brussels,’’ the statement added.
The Economic Partnership Agreement (EPA) is a scheme to create a free trade area between the European Union and the African, Caribbean and Pacific Group of States (ACP).
Source: http://businessdayonline.com/2014/01/west-africa-eu-to-resume-epa-negotiations/
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SD holds its breath
This week, Swaziland will attend crunch talks on the revenue-sharing formula under the Southern African Customs Union (SACU)
This week, Swaziland will attend crunch talks on the revenue-sharing formula under the Southern African Customs Union (SACU) and the outcome of the talks will have a huge bearing on the kingdom’s financial stability.
Termed as a ‘make or break’ conference, the talks will be held in Lesotho between 30 and 31 January.
Impeccable sources have revealed that the whole purpose of the talks borders on reviewing the SACU revenue-sharing formula.
Should the formula be reviewed – as is the wish of South Africa – Swaziland could be thrown into a financial crisis.
South Africa is the one that has pushed for the talks because it feels the need to drastically change the formula for its own benefit.
Finance ministers from SACU member states are the ones expected to attend the conference and Swaziland will be represented by Senator Martin ‘Gobizandla’ Dlamini, who is also the former governor of the Central Bank of Swaziland.
Dlamini has confirmed the meeting and that he will be the one attending it.
Impact
“The meeting is very important because it is where strategies for SACU are made. Should the revenue-sharing formula be reviewed, it will have a major impact on Swaziland,” Dlamini said.
The minister, however, did not want to preempt the outcome of the talks and only said the purpose of going there is to negotiate.
Swaziland is highly dependent on SACU receipts which account for almost 60 percent of the kingdom’s national budget.
The kingdom is expected to receive E7 billion as its SACU share for the coming financial year.
In an interview with the Sunday Observer last week, new Governor of the Central Bank and former Finance Minister Majozi Sithole expressed worry at the country’s “over reliance on SACU as a source of government revenue.”
During his tenure as finance minister, Sithole experienced an unprecedented financial crisis for Swaziland after a drastic drop in SACU dividends.
Should the formula be reviewed, therefore, Dlamini could be faced with a similar experience where government literally struggles to meet its financial obligations that include paying civil servants’ salaries, paying suppliers and contractors, financing capital projects and issuing of social grants.
Swaziland has a number of social grants that include paying school fees for orphaned and vulnerable children (OVC), funding of free primary education, meeting quarterly grants for the elderly and offering free medical care for citizens aged over 60.
The number of social grants is another worry that was expressed by Governor Sithole last week as he noted that there is “high dependence on government for many things by the public”.
Crunch
All focus will, therefore, be on the outcome of the SACU crunch talks as all the past challenges that came with the financial crisis could be relived.
Sources have also revealed that should the revenue-sharing formula be passed by the ministers, the only way for Swaziland to survive would be through the intervention of Heads of State.
While South Africa’s Cabinet is reported to be in favour of the revenue-sharing formula, President Jacob Zuma is however said to be against it because he does not want to leave a legacy of having contributed to the downfall of neighbouring countries’ economies.
South Africa is the dominant economy within SACU but feels that there are imbalances when it comes to the dividends.
South Africa’s Minister of Trade and Industry Rob Davies, said that South Africa currently pays about E48 billion to the customs union annually, which constitutes around 98% of the common pool of customs and excise duties shared amongst SACU members.
Of this revenue pool, 55% is distributed to Botswana, Lesotho, Namibia and Swaziland.
This is in line with the revenue-sharing formula agreed upon in 2002, which allocates customs revenue according to each country’s share of intra-SACU imports.
Allocated
There is also a development component, which is allocated according to a country’s GDP per capita in order to assist the less-developed SACU members.
There has been a demand by South Africa that a percentage of SACU revenue be set aside for regional and industrial development.
It is said that efforts to change the revenue-sharing arrangement so that money can be set aside for regional development would result in less money going into the coffers of Swaziland and other member states.
Currently, the money is received with no strings attached but South Africa, in case she does not pull out, is expected to introduce restrictions on how the revenue derived from SACU is supposed to be spent or utilised.
What is SACU?
The Southern African Customs Union (SACU) consists of Botswana, Lesotho, Namibia, South Africa and Swaziland.
The SACU Secretariat is located in Windhoek, Namibia. SACU was established in 1910, making it the world’s oldest Customs Union.
Historically, SACU was administered by South Africa, through the 1910 and 1969 Agreements. The customs union collected duties on local production and customs duties on members’ imports from outside SACU, and the resulting revenue was allocated to member countries in quarterly installments utilising a revenue-sharing formula.
Negotiations to reform the 1969 Agreement started in 1994, and a new agreement was signed in 2002. The new arrangement was ratified by SACU Heads of State.
The Economic structure of the Union links the Member states by a single tariff and no customs duties between them. The Member States form a single customs territory in which tariffs and other barriers are eliminated on substantially all the trade between the Member States for products originating in these countries; and there is a common external tariff that applies to non-members of SACU.
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EU-US trade and investment talks: Why they matter
Talks to free up more trade and investment between the European Union and the United States got under way early in 2013. A good agreement in 2014 would be a positive thing, and not just for the EU and the US. Here is why.
The gains on offer from the current round of negotiations between the US and the EU under the banner of the Transatlantic Trade and Investment Partnership (TTIP) are substantial. Indeed, if successfully concluded, TTIP would be the most significant bilateral free trade agreement (FTA) to date, covering approximately 50% of global output, almost 30% of world merchandise trade (including intra-EU trade, but excluding services trade) and 20% of global foreign direct investment (FDI).
The US and the EU are each other’s primary investment and trade partner. In 2012, 63% of US foreign direct investment went to the EU, and 44% of FDI inflows to the US originated from the EU. Bilateral investment flows between the US and EU generated a fifth of all international merger and acquisition (M&A) activity. The US accounts for 20% of EU exports and 20% of EU imports (excluding intra-EU trade), while the EU accounts for 28% of US exports and 24% of US imports.
These transatlantic trade flow numbers are even more important measured in value added terms than in gross terms (see chart). The US receives 23% of total EU exports and provides 21% of EU imports on a value added basis, while the EU accounts for 29% of US exports and 27% of US imports. In other words, the US is by far the most important destination of EU value added, and it is also by far the largest supplier of value added in EU imports.
Given that transatlantic trade barriers are already low, most of the benefits from an eventual agreement will come from easing impediments to trade and investment behind borders. For example, substantial benefits would be reaped if public procurement in both the United States and the European Union were opened, at all levels of government.
One OECD study estimates potential welfare gains to the EU and the US of as much as 3-3.5% of GDP; others range from 0.5% to 3.5% of annual GDP. One report even sees gains as high as 13% of GDP for the US and 5% for the EU. With both economies facing a long-term need for fiscal consolidation alongside persistently high unemployment, these gains are considerable, all the more so because no additional spending or borrowing will be needed to achieve them.
None of these estimates captures the potential dynamic effects of trade and investment liberalisation and resulting productivity growth. Many commentators believe that these are, in fact, the most important potential gains, but they have not been captured in any of the studies done so far.
Trade between the US and the EU is to a large extent of an intra-industry and intrafirm nature, suggesting that one effect of TTIP is more likely to be changes within existing value chains, such as where certain marketing services are carried out, rather than relocation of whole industries. This already high degree of market integration argues for an aggressive “problem solving” approach to remove all unnecessary and costly bottlenecks to trade and investment.
The resulting reductions in costs will, of course, benefit businesses and generate growth and employment in the US and the EU. And because more efficient regulatory regimes in the US and EU are, by their very nature, not discriminatory, they could benefit trading partners that are not direct parties to any eventual agreement.
That means wider overall benefits than purely what bilateral actions would suggest.
What about the multilateral trading system?
Still, TTIP is a bilateral process rather than a multilateral one, and such processes are generally thought of as “second best”. On the other hand, as the US and EU are principal export, import and investment destinations and sources for many third countries, an ambitious agreement could therefore benefit third countries as well. In fact, an agreement could conceivably become a “gold standard,” opening the way for deep and comprehensive global trade and investment integration.
By addressing a wider range of sensitive and complex issues that have so far eluded the WTO negotiations, the agreement would be a building block for future multilateral initiatives, in much the same way as today there is interest in “multilateralising” WTO-plus provisions of existing regional trade agreements. But if an agreement offers little new trade and investment liberalisation, at and behind the border, the TTIP would merely add one more deal to the hundreds of bilateral and regional arrangements that already exist.
The announcement of the TTIP negotiations by the United States and the European Union was appropriately ambitious, focusing on the remaining impediments to trade and investment both at and beyond their borders. At the same time, there was explicit recognition of sensitive and long-standing areas of difference. Mutually acceptable solutions may in some areas remain elusive in the short term, but innovative approaches to improving international regulatory collaboration, from mutual recognition agreements to joint consultative bodies, could mitigate differences over time.
Transparency will also be a key element. Given that regulatory matters are expected to be at the heart of any eventual agreement, transparency in the way regulations are made and implemented will allow other countries, not party to the agreement, to consider whether and how to “opt in”. Some regulatory measures, such as improved border procedures and more effective anti-corruption provisions, are nondiscriminatory by nature and offer benefits far beyond the borders of the EU and the US.
An eventual TTIP agreement could also be made open to other participants willing and able to agree to the provisions. In the investment field, the US and the EU are already bound by the most favoured nation (MFN) obligation under the OECD Codes of Liberalisation: any liberalisation measures which result from TTIP should be extended to other adherents to the OECD codes.
Extending mutual recognition of standards to third countries, with which either the US or the EU has already reached a comparable agreement, is another possible way forward.
The recent breakthrough at the multilateral trade talks at Bali in December is a boon for the WTO and for the multilateral trading system, and will generate large benefits, particularly for developing countries. Every effort must be made to ensure that progress continues. But governments will inevitably continue to pursue other avenues also. Fortunately, these second-best options can be supportive of an effective multilateral trading system if they are ambitious, break new ground in sensitive areas, keep participation as open as possible and are amenable to multilateralisation. With progress also being made in Geneva, it will be easier to ensure that regionalism and multilateralism are ultimately reconciled and become mutually reinforcing.
Another dimension to take on board concerns trade in value added (TiVA) and global value chains. The OECD’s work to date on these issues highlights that trade and investment openness are important components of comprehensive structural policy reforms that could contribute to strong, sustainable, balanced and inclusive growth. But much remains to be learned about the full range of policy implications for countries at different stages of development and for industries and firms of various characteristics, structures and sizes. Our goal is to integrate TiVA into the international statistical system; extend country, industry and indicator coverage; and expand our analysis across the full range of relevant policy areas. All of this work is expected to be carried out within an expanded network of partner institutions and governments.
Ken Ash is Director of the OECD Trade and Agriculture Directorate
Source: http://www.oecdobserver.org/news/fullstory.php/aid/4262/EU-US_trade_and_investment_talks:_Why_they_matter.html
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Pooling of strengths vital for integration – Hon Kandie
The Chair of the Council of Ministers, Hon Phyllis C. Kandie, has reiterated the need to collectively pool strengths together if the Community is to remain relevant in the fiercely globalized world. The Chair maintained that such a move may necessitate occasions where Partner States cede part of their sovereignty and place the same on trusted regional institutions.
In her maiden speech to the August House this afternoon, Hon Kandie, the Cabinet Secretary for East African Affairs, Commerce and Tourism in the Republic of Kenya, undertook to address as a priority, existing challenges and sensitivities involved in the implementation of the pillars of integration.
She remarked that as the region enters the Monetary Union and proceeds towards the Political Federation, moments of anxiety may occasionally be realized, leading to slower pace of implementation.
“The success or failure of EAC Integration is therefore going to be our collective responsibility”, Hon Kandie remarked.
The Cabinet Secretary hailed EALA and noted that it continued to be a unique mechanism through which the Community could maximize on the complementarities between the EAC Organs and institutions. She maintained that it was necessary for the Council and Assembly to collaborate further in order to smoothen the legislative process.
‘There is no doubt that one of the greatest challenges to implementation of the directives, decisions, Protocols and EALA Acts is the slow pace at which Partner States are moving towards the review, amendments and harmonization of national laws to conform to those of the Community”, the Cabinet Secretary stated.
“I do appreciate that for the Assembly to effectively engage in the process, we have to continuously review and strengthen the working relations between the Assembly and the Council, not just at the regional level, but also through the co-ordination of EALA activities at the country levels”, she added.
On the Single Customs Territory, the Chair urged the Assembly to support the Framework for the Operationalisation and a Roadmap on the Implementation of the Single Customs Territory whose commencement became effective on January 1st, 2014. At the last Summit of Heads of State, the EAC leaders directed that the Roadmap be fully operationalised by 30th June 2014.
On the Monetary Union, the Cabinet Secretary implored EALA to actively engage relevant national constituencies with a view to ensuring the ratification of the Protocol by 1st July 2014. This level of support Hon Kandie reiterated was vital for the strengthening of the integration process.
“I challenge you to actively engage in the implementation of these directives. In addition, I will be counting on you to support the on-going consultations on the revised model of the EAC Political Federation” the Chair of Council stated.
The Roadmap and Action Plan of the Political Federation is due for consideration when the Summit convenes in April 2014.
Hon Kandie took over as the Chair of the Council of Ministers from Hon Shem Bageine, Minister for EAC, Republic of Uganda on November, 30th, 2013.
Download: Statement by Chairperson of the EAC Council of Ministers – 4th Meeting – 2nd Session – 3rd Assembly
Source: http://www.eac.int/index.php?option=com_content&view=article&id=1464:pooling-of-strengths-vital-for-integration-hon-kandie&catid=146:press-releases&Itemid=194
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Bali Package – Trade Multilateralism in the 21st Century
In this column, Roberto Azevêdo, director-general of the World Trade Organisation (WTO), writes about the Bali Package of agreements reached in early December 2013.
At the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali Dec. 3-7, a series of decisions was adopted aimed at streamlining trade, allowing developing countries more options for providing food security, boosting least developed countries’ trade, and bolstering development in general.
The first pillar of the “Bali Package” is agriculture. This is the cornerstone of the Doha Development Agenda, which the WTO has been working on since 2001. Agricultural issues are very dear to developing countries, and the Bali Package delivered some important outcomes.
For example, it sets us on track for a reform of export subsidies and measures of similar effect, and it makes practical progress towards better implementation of the tariff quota commitments assumed in the Uruguay Round (1986-1994).
There is also a reaffirmation and a deepening of the political commitments assumed in Hong Kong in 2005 on trade liberalisation and the reduction of distorting support to cotton – a very important issue for the African countries that grow that crop.
The Package also provides temporary protection for food security programmes in developing countries, which allow for the stockpiling of grain for subsequent distribution to the poor. As we know, some of those countries could be exposed to legal challenges in the WTO for exceeding the limits stipulated in the Agriculture Agreement for certain types of domestic support.
So, in addition to the temporary protection against legal challenges, the Bali Agreement states that a permanent solution will be negotiated and concluded before the 11th Ministerial Conference in four years’ time.
The second pillar of the package is development. Here, a monitoring mechanism will provide for the review and strengthening of special and differential treatment provisions for developing countries, which are contained in all WTO multilateral texts. This achievement is vital for the equilibrium and efficacy of the multilateral system.
There are also a number of specific measures to support the least developed countries (LDCs). They include reforms that would enable services providers in LDCs to enjoy new export opportunities in developed country markets.
They also include steps to simplify rules of origin, which again will open up new export opportunities for those countries specifically.
Under this pillar we will also see improvements in trade preference arrangements which extend exemption from tariffs and quotas to LDC exports.
The third and final pillar is trade facilitation, which sets out to simplify and modernise customs procedures, and make them more transparent, thereby reducing transaction costs.
The Agreement on Trade Facilitation will be able to provide a significant – and today much needed – boost to the global economy, delivering growth and jobs. This could be worth as much as one trillion dollars per year to the global economy, generating up to 21 million jobs.
Significantly the Agreement also ensures the provision of technical assistance to support developing and least developed economies to implement these modernising reforms, and therefore help them integrate better into global trade flows.
Clearly estimates can vary, but once the Agreement is implemented, there could be an expansion in developing country exports of up to 10 percent – compared to a 4.5 percent expansion in developed countries.
It is true that the deal represents only part of the Doha Development Agenda. But there can be no doubt that this is a significant package that will provide a considerable economic boost and improve the lives of millions of people around the world – particularly among the poorest and in countries whose economies have stalled and are suffering high levels of unemployment.
In the specific case of the European Union and its member States, the conclusion of the Bali Package reflects that grouping’s chief negotiating objectives. With the Agreement on Trade Facilitation, opportunities for expanding trade will clearly increase.
The Agreement also offers potential to facilitate the internationalisation of small and medium sized enterprises, which are important drivers of job creation and income distribution in many European countries.
But of course these outcomes do not fully reflect achievement in Bali. There was a great deal more at stake. I said at the start of the Bali Conference that the very future of multilateral trading system hung in the balance.
In recent months there has been a lot of talk about regional and bilateral agreements. The Transatlantic Trade and Investment Partnership between the United States and the European Union is one such potential agreement. My view of this is the same as of other potential agreements of this kind: it is a positive initiative to be welcomed – but it can only ever be one part of the wider picture.
Agreements such as this cannot be sufficient on their own to ensure globalisable gains. The proliferation of regulations and standards tends to multiply rather than reduce costs.
The multilateral trading system was never the only option for international trade negotiations. It has always coexisted with, and benefited from, other initiatives, whether regional or bilateral. They are therefore not mutually exclusive alternatives.
The WTO disciplines also need to evolve to reduce the gap that will exist between multilateral regulations and the new generation regulations negotiated outside Geneva.
The two processes, multilateral and bilateral, must move forward together to reduce costs effectively and to curb protectionism. Otherwise, we could see results that are exactly the opposite of what we are seeking.